8. Bridging Institutional Distance: An Emerging Market Entry Strategy for Multinational Enterprises

Despite attractive investment opportunities, multinational enterprises (MNEs) looking to enter emerging markets face multifaceted challenges. While much of the literature tends to infer that emerging markets of all types face similar institutional challenges, this chapter argues that significant differences exist across emerging markets, which may help explain variations in entry mode strategies of MNEs to these markets. Entering an emerging market requires development of a unique market entry strategy that focuses on narrowing the institutional distance (i.e., regulatory, cognitive, and normative) between MNEs’ home and targeted host markets. Within the context of the Nigerian market, cognitive and normative institutional distance likely poses a greater challenge to MNE success than regulatory institutional distance. This chapter identifies corporate social responsibility, social media engagement, governmental relations, and informal relational ties as key market entry strategies that enable MNEs to build legitimacy in the Nigerian market, which then helps minimize the costs of the cognitive and normative institutional distances. Thus, this chapter proposes that MNEs can boost emerging market entry success levels when they are able to build and leverage unique market entry strategies to bridge the institutional distance between their home and host country markets.